Why Should You Consider a FHA Loan




FHA Loans Are Available for Individual Condos

Thanks to a change in October 2019, buyers can qualify for FHA loans for individual condos without the entire building needing to be approved.  To get FHA approval for a single unit, the buyer's lender will still need to file paperwork with the FHA showing the development meets basic FHA standards.

FHA Offers Loans for Fixer Uppers

An FHA 203(k) loan can be used to purchase and renovate a property.  The costs of the renovation are rolled into the total mortgage amount.  The property may undergo two appraisals:  an "as is" appraisal assessing the pre-renovation condition and an appraisal that assesses what the hypothetical condition would be after renovations are complete.

Gift Money Can be Used as Part of a Down Payment

An FHA loan allows you to use gifted money as part of your down payment.  The donor will need to provide a letter signed and dated by the person giving the gift and the borrower with the giver's contact information, their relationship to you, the dollar amount of the gift, and a statement that no repayment is required.

FHA Mortgage Insurance Cancels After 11 Years for 10% Down Payment

Mortgage insurance is required for all FHA loans, but if a down payment of 10% or more is made, mortgage insurance premiums last for 11 years rather than the life of the loan.

Debt-to-Income Ratios of 50% are Allowed

Under certain conditions, FHA loans will allow a debt-to-income ratio of up to 50%, which means your total monthly debt payments could be up to 50% of your pretax income.  Qualifying for this maximum ratio requires a credit score above 580 and compensating factors such as verified cash reserves or additional income not already factored into the ratio.  Debts you aren't actively paying count toward this ratio.  For deferred student debt, 1% of the total will be used as the monthly payment amount.  For other loans your aren't currently repaying, 5% of the loans total will be used to calculate your ratio.